It was all smiles and warm handshakes at the start of European Parliament talks on the bloc’s budget for next year.

Negotiations, however, soon stalled in row over an extra nine billion euro spending demand for this year.

The impasse threatens crucial education, infrastructure, aid and research projects, but the President of the European Parliament believes there is no cause for alarm.

“We are not in agreement for the time being, this is not a catastrophe, we’ve suspended it. We now expect a new proposal from the commission and then we’ll restart the negotiations,” said Martin Schultz.

The row has also held up 670-million euros in EU aid for the Italian region of Emilia Romagna, which was hit by earthquakes earlier this year.

If no deal is reached, the Commission will be forced to draft a new budget proposal in a final bid for a deal before the end of the year.

Alain Lamassoure, president of parliament’s budget commission said: “of course we’re ready to discuss all the projects for 2013, but only when we’ve settled the account for 2012. Unfortunately, several members states agree but a certain number refuse.”

The parliamentary budget stalement is a crucial indicator of how difficult next week’s EU summit is shaping up to be on the bloc’s 2014-2020 budget.

More tough and tense talks are in store with a core of national governments wanting to limit any increase in the EU’s budget.